A guide to the process of purchasing property in Hungary

Purchasing property in Hungary is overall quite simple.

Having been thought of as very much a traditional country, Hungary is in fact an up-ad-coming destination for expatriates. If you have been considering a move to the country, you might have wondered about how the process of purchasing property in Hungary works. On this page, we will be walking you through all the information you will need.

Since Hungary and more specifically Budapest is such a vibrant destination, the first step of purchasing a home here is a written offer. You (or your agent) tell the current owner of the property what your budget is. If the owner accepts the offer, you will both have to agree on the main commercial terms of the deal, such as payment terms, handover details, utility service re-registrations and so on. After initial talks are done and you as buyer inspected the property, your lawyer did his/her due diligence of the title deed; a lawyer has to draw up a sale and purchase agreement. At the time the agreement is signed, you usually pay a deposit of 10% of the purchase price. Keep in mind that this 10% is not regulated by Hungarian laws, but rather a customary agreement.

All about the purchase contract

The seller(s), buyer(s) and, if there are any, beneficiary owner(s) – or with proper power of attorney having certain formalities, their authorised representatives – all need to sign the purchase contract in the presence of an attorney or notary, however the latter is quite rare in practice. Once the attorney has provided his/her countersignature, the purchase contract is made official.

Generally speaking, lawyers have a 1% + VAT fee which they charge for these services. This comes down to roughly 1.2% of the purchase price of the property. However not legally mandatory, it is customary that the purchaser brings in the lawyer, and in such case, it will most probably be the purchaser who is also liable for paying the attorney fees when buying property in Hungary.

If you are a third-country national looking to purchase property in Hungary, you need to obtain a purchase permit, for which you will have to submit the sale and purchase agreement, along with a few other documents at the competent Administrative Office. As soon as the purchase is approved and permit obtained, your lawyer submits the registration application to the Land Registry Office. These procedures can each take up to 30 days to be finalised. To avoid delaying the process, it is very important that you put together the right documents and ensure professional care. For the best results, we always advise contacting us for professional legal assistance in the matter.

Costs involved in purchasing property in Hungary

In most cases, all of the costs involved in purchasing Hungarian property are payable once the purchase contract is signed. Here is what costs you can expect to pay:

• Land registry fee – A registration fee of HUF 6,600 (roughly €20) is applicable
• Notarial fee – This fee generally only applies if you as a buyer apply for a home loan to help you purchase the desired Hungarian property as commercial banks generally insist on the mortgage agreement to be drawn up in the form of a notarial document, according to their internal rules
• Dues –The acquisition state duty is 4% of the property value, but preferential rules may apply depending on several factors such as the price of the property, first ownership, or more commonly, in cases where an individual sells and buys property within one year. In this case, preferential treatment can be applied for (with the help of your real estate lawyer), whereby you only need to pay such costs after the difference in value between the two properties involved in these subsequent transactions.
• Capital gains/income tax – If you sell your property after at least five years from the date of purchase, there is no income tax to be paid after the gain, this is due to the value of the property being “depreciated” from a tax point of view, which occurs gradually over five years of ownership.

Need more help?

We are a team of highly specialised and experienced immigration and real estate lawyers that are ready to lend you a helping hand. Feel free to get in touch with us today with any questions you might have about the expert tricks and process of purchasing property in Hungary!